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U.S. Securities and Exchange Commission

U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 17488 / April 24, 2002

SECURITIES AND EXCHANGE COMMISSION v. WILLIAM M. UCHEREK, United States District Court for the Northern District of California, Civil Action No. C-02-2003

SEC SUES BAY AREA STOCKBROKER FOR DEFRAUDING ELDERLY INVESTORS IN PONZI SCHEME

The Securities and Exchange Commission today sued an Alameda County-based stockbroker for fraudulently raising approximately $3 million from his elderly clients by selling fictitious investments he claimed were offered by Charles Schwab & Co. In reality, the Schwab funds he described did not exist and he simply deposited the money into his personal brokerage account.

In a complaint filed in the United States District Court for the Northern District of California, the Commission alleges that William M. Ucherek, through his work selling municipal bonds, developed relationships with many elderly investors. Beginning in at least 1998, Ucherek offered at least 20 clients investments in what he claimed were pooled municipal bond funds that would pay a fixed rate of interest, tax-free. Ucherek called these funds the Schwab 12, Schwab 24, and Schwab 36 (depending on the term of the investment). In fact, no such funds exist. Ucherek used the money to pay personal expenses, including car payments, credit card bills and gambling debts. In addition, Ucherek used some of the proceeds to pay prior investors, and also provided phony account statements to create the appearance of a bona fide investment fund.

According to the complaint, in late 2001 one of the investors contacted Schwab, which initiated an internal investigation and traced the scheme back to Ucherek. Ucherek subsequently admitted his misconduct to the staff of the Commission.

The Commission's complaint charges that Ucherek committed securities fraud in violation of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The complaint seeks a permanent injunction against future violations, disgorgement of all ill gotten gains and a civil monetary penalty from Ucherek.


http://www.sec.gov/litigation/litreleases/lr17488.htm

Modified: 04/24/2002